Bitcoin suffered yet another suck last week when Bitfinex, one of the cryptocurrency’s largest exchanges, suffered a hack that cost its users about $65 million. Every one of its investors spotted their funds abruptly druppel by 36%, spil the company determined to “socialize” the losses.
The source of the security breach remains unconfirmed, spil Bitfinex proceeds to work with &ldquo,authorities&rdquo, (it&rsquo,s not clear which ones) to pinpoint what happened. But the details of the hack aren&rsquo,t its only mystery. Burnt traders are now fighting to figure out something even more basic&mdash,who exactly is behind Bitfinex and where are those people located?
The exchange wasgoed treating $407.Two million te monthly trade volume before the hack, but there is precious little information about Bitfinex&rsquo,s origins and founders.
This differs from exchanges of comparable size. kraken, a US-based exchange, lists all of its team’s major members on its webstek, with photos and brief bios. Coinbase, the very first regulated bitcoin exchange te the US, maintains a community pagina for its users and has suggested its founders up for interviews. Bitfinex has done none of thesis things. There are no &ldquo,About Us&rdquo, pages to peruse, or trade-press profiles of founders.
This has caused confusion and frustration among Bitfinex traders whose funds disappeared, who want to waterput a human face on the company. When the exchange Mt. Gox went insolvent te early 2014, some investors flew to Tokyo to confront its management. But if aggrieved investors were to fly to Hong Kong to knock on Bitfinex’s doorheen, they would be hard-pressed to find someone to harangue.
Almost all of the company&rsquo,s public relations after the hack have bot led by Zane Tackett, a &ldquo,community manager&rdquo, for Bitfinex presently based ter California. When traders press for more information about the company and its investigations, they often complain on Reddit about getting unsatisfactory answers.
&ldquo,WHO is te control of the wallets and moving coins right now?&rdquo, writes one commenter on Reddit. “If he [Tackett] doesn&rsquo,t know the answers to thesis questions, what makes him so sure you [sic] he is not working for crooks? Is he passing on our concerns to management, and convenient with their explanation? Or is it a 1-way dialogue?”
The company claims to be “based” ter Hong Kong, but it emerges to have no central office. According to a CFTC document issued after the company wasgoed fined, Bitfinex registered ter the notoriously opaque British Cherry Islands under the name BFNXA, which wields a Hong Kong subsidiary. The address listed for &ldquo,Bitfinex Limited&rdquo, te the Hong Kong&rsquo,s company registrar is te fact the office for Proxy Management Consultants Ltd&mdash,a rock hard that helps companies incorporate locally.
Members of the bitcoin community te Hong Kong tell Quartz that Bitfinex&rsquo,s employees are spread across different countries. LinkedIn, for example lists J.L. van der Velde spil Bitfinex&rsquo,s Taiwan-based CEO and Raphaelle Nicole spil its France-based founder. Other employees reportedly live te London, California, and Hong Kong. None of them have come forward personally and publicly to take responsibility for the hacks or explain what might have caused them (strafgevangenis did any react to Quartz&rsquo,s requests for comment on this lump).
According to Larry Salibra, co-founder of the Bitcoin Association of Hong Kong, Bitfinex&rsquo,s leadership team is at best press-shy, and at worst shadowy. Overheen the course of years, the company&rsquo,s founders seldom appeared at circunscrito events or meetups. This evasiveness should have signaled to investors that something wasgoed amiss, says Salibra.
&ldquo,Typically when you run a business you want to build a corporate brand, especially ter technology or things when there&rsquo,s risk,&rdquo, says Salibra. &ldquo,When a co-founder of a company, especially a financial one, isn&rsquo,t interested ter associating his private brand with the company brand, it instantly raises crimson flags,&rdquo, says Salibra.
To the promedio consumer, it might seem unusual to dump money into an exchange without knowing a little bit about who runs it. But not everyone agrees.
Joseph Wang, a bitcoin researcher ter Hong Kong who lost &ldquo,thousands&rdquo, of dollars from the Bitfinex hack, says that he met Bitfinex&rsquo,s CEO and does not suspect any intentional wrongdoing. &ldquo,I don&rsquo,t get the sense that he&rsquo,s timid because he&rsquo,s hiding something,” Wang says. “I think he&rsquo,s timid just because he&rsquo,s timid.&rdquo,
Te Wang&rsquo,s view, the company&rsquo,s paper trail of incorporations, licenses, and canap accounts&mdash,which pass through Hong Kong, Taiwan, and the British Cherry Islands&mdash,are “standard for any international fund.” The company&rsquo,s perpetual evasiveness, meantime, is not necessarily a sign that its founders are crooks, he says.
How can a bitcoin investor distinguish inbetween a bona-fide, secure exchange and one that can be breached or is a scam? It’s near unlikely.
For one thing, ter the nascent stages of this cryptocurrency, hacks like thesis will likely proceed, spil exchanges figure out how to make security airtight. And even however almost all US-dollar trading is done through venture capital-backed firms (which ensure some degree of accountability), some holdouts, like the anonymously operated BTC-E, still instruction a sizable slice of trading volume. For cryptocurrency traders, there’s only one golden rule: caveat emptor, or buyer beware.
&ldquo,If you&rsquo,re te the bitcoin world then you have to figure out who&rsquo,s fair and who&rsquo,s not,” says Wang. “And even when you meet fair people, fair people mess up. Spil far spil I can tell, Bitfinex just messed up. If you don&rsquo,t want to actually roll your own valscherm, then don&rsquo,t do anything involved with bitcoin&rdquo,